Aqua monta – MARKETING PLAN – PART 3

Generally speaking, there is a relationship between price and total market size in bottled water industry. Premium products in high-quality, individually designed glass bottles aim at profitable, small volume niche markets. The mainstream is aimed at the wider market. Also branded products cost more for consumers, a differential they are willing to pay provided they perceive added value either in product quality or product values or both.[1]

Pricing of the Aqua Monta should be influenced by the:

existing natural spring bottled water demand,

future trends,

competition,

production costs, and

perceived value added to consumers.

A specified forecast of the consumption of mineral water provides security and optimism regarding the marketing of mineral water from springs Ropušica. For that period it is necessary to reinforce the activities of the placement of mineral water on the international market. Additionally, there is a clearly noticeable trend of demand increase of bottled natural spring water.

Taking into account the existing competition, placement of new products in the market of bottled water, in addition to the quality of mineral water, needs to be followed by price for bottled water that is below 0.3 EUR/ l.

In the means of defined terms of project implementation financing, calculations in the upcoming chapters (see Appendix) indicate that the average selling price of water should be formed on the level above 0.15 EUR/l. Income statement projection shows that the bottling water business would be profitable, if the income from the sale of water would be formed at the adopted level of sales price of 0.25 EUR/1.5 l and 0.20 EUR/0.50 l.

DISTRIBUTION AND PACKAGING

Distribution patterns have been quite different across countries and companies, although the trend is towards supermarkets being the dominant outlet for bulk consumption, followed by HoReCa (hotels, restaurants, and cafes).

In the case of bottled water, packaging has three functions:

protective function,

distribution function, and

marketing function.

Packaging used for water can have very different shapes and colors and are made of different materials. For a long time, bottled water was only available in glass, a very good but heavy material. At the end of the 1960s, bottlers started to use packaging made of PVC (vinyl polychlorure). In the 1980s, a new kind of plastic started being used: PET (polyethylene terephtalate). PET is progressively replacing PVC because of its numerous advantages.

Plastic, either PVC or PET, is the most frequently used material to make bottles of water: about 70% of the bottles used for natural mineral water are made of plastic. Indeed, plastic bottles are more expensive than the liquid they contain. Their price can fluctuate according to oil prices. Even if special PET bottles can resist gas pressure, they tend to be more porous than glass. Glass bottles are used mostly for the catering industry.

Packaging is an essential part of bottled water marketing strategies. “The packaging makes the brand. The brand makes the packaging. A product must have a visibility to be sold; its presentation refers to notions such as service, security, hygiene”[2]. In some cases, it is even possible to recognize the brand of the bottled water thanks to the shape and color of its packaging. Some brands have reshaped their bottles in order to make them look like the marketing message they are supposed to carry. Evian bottles, for instance, now figure high mountains not only on the labels but also on the plastic itself. Bottles of water are becoming aesthetic objects that can be collected.

Although PVC is still used, PET is increasingly used for many reasons: it is brighter than PVC, very transparent and it almost looks like glass. PET is shatter-resistant and easy to work on. Its light weight (20% lighter than PVC) enables to reduce plastic quantities needed to make a bottle. It is compressible, so volumes of waste are smaller. PET is in addition easy to recycle or remanufacture: it can be turned into polyester carpets, fabrics and fibers for the textile and clothing industry, plastic films, eggs boxes, industrial strapping and new PET bottles. When burnt, it doesn’t release chlorine into the atmosphere, contrary to PVC, whatever type of incinerator is used.

PROMOTION

Marketing and advertising campaigns are essential to differentiate the product and attract consumers. Packaging and advertising work to foster these perceptions and brand bottled water in ways similar to branded soft drinks. Brands tend to associate with specific activities: sport, fitness, slimming, fashion, etc. For example, in the last 50 years, Evian has been the water of babies, emphasizing that its low mineral concentration is suitable for them. The brand’s marketing strategy capitalizes on infants, from the pink color of its labels to advertising campaigns. Evian also sponsors pediatric research. Evian is a good example on niche focusing water bottling company with strong presence through visual identity and market focus.

Promotion of Aqua Monta will be provided through print and media advertising (TV, radio, Internet, billboards, newspapers, magazines, etc.), supermarkets, outlets and HoReCa distribution channels, word of mouth, sponsorships, outside references, and through packaging and absolute presence. Additionally, Aqua Monta spring water will be packaged in custom labeled stylish PET and glass bottles with waterproof labels. Emphasize of the promotion will be on tradition, heritage, pureness of nature in Montenegro.

The subject of the promotion is bottling of natural spring mineral water. Aqua Monta is going to be positioned as being pure and safe and of an outstanding quality. In order to give an added value to consumers, it has to be differentiated from competition in bottled spring water industry. Since it is said that “bottled water is only as good as its source”, the competitive advantage of Aqua Monta will be its origin – Ropušica spring, that makes for the best tasting water one can find in a bottle. This beautiful, pristine spring surrounded by lush woods has been running for over few hundred years.

In order to maximize its reach, Aqua Monta will differentiate itself amongst others by focusing on a local reach, proclaiming tradition and heritage, as well as with its price which is significantly under the price of competitors. Additionally, Aqua Monta will offer an additional service to customers, and that is the service of private customized labeling whereas companies and customers will be able to order larger amounts of bottles with their private label which will depict alternatively the logo of a company, event, occasion, etc.

PRODUCT FORECAST

The demand for bottled water is driven by a variety of factors including but not limited to convenience, the perception that bottled water may be safer than local municipal water, a new clean bottle, and taste preferences.

The preliminary project for the construction of spring water bottling factory includes capacity estimations of about 8000 bottles per hour. If the factory works in 2 shifts daily 8 hours, this would mean 64,000,000 bottles per year (water in PET packaging bottles of 0.5 l and 1.5 l). Total amount of bottled water will be placed on the domestic market. Planned sales price amounts to EUR 0.25 1.5 l and 0.20 EUR/0.5 l.

Aqua Monta is a perfect investment opportunity for any foreign investor seeking to become involved in the spring water bottling business. It offers advantageous compensation and favorable return on investment.

Ropušica spring is located at the altitude of 1,365 m, in utterly inhabited area. Minimal spring outflow is greater than 0.5 l/s. Technical solution for spring water bottling process proposed by this business plan involves the construction of water collection vault, pipelines for the transport of water and a plant for water bottling with relevant and adequate equipment. The capacity of the factory for water bottling is 8000 bottles of 1.5 l and 8000 bottles of 0.5 l, or 64,000,000 l/annually. It is planned to build up this facility in a period of 8 months.